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Expert opinion proved to be the key to vacating a preliminary injunction in a design-patent case recently decided by the Federal Circuit Court of Appeals.
The expert's affidavit raised a substantial question as to the validity of the patents, the Federal Circuit found, ruling that the district court erred in finding that plaintiff was likely to succeed on the merits of the case and in issuing the injunction.
At issue in the case were two design patents owned by PHG Technologies, a company that sells medical-patient identification labels. The patents covered the "ornamental design" of a medical label sheet sold by PHG. The sheet included 11 rows of three labels each. The top nine rows contained labels of equal size; the bottom two had unequal-sized labels corresponding to the sizes of pediatric and adult medical wristbands.
In August 2005, PHG sued its competitor, St. John Companies Inc., contending that the design of St. John's medical-label sheet infringed PHG's patents. PHG asked the court to issue a preliminary injunction halting St. John 's continued sales of the sheet.
At a district court hearing on the request, St. John argued that the sheets were primarily functional, not ornamental, and therefore not entitled to design-patent protection. In support of its position, it presented evidence from the prosecution history of a related PHG utility-patent application and an affidavit with the expert opinion of Adam Press, who was also St. John's chief executive officer.
PHG countered with the testimony of one of the inventors, Brian Moyer, who said that he chose the design because it was the "most aesthetically pleasing."
The district court issued the injunction, finding that function did not dictate the sheet's design and that the sizes and arrangement of the labels were primarily ornamental because there were other ways to arrange the labels on the sheet.
Affidavit Raises Question
On appeal, St. John challenged the district court's finding that PHG was likely to succeed on the merits of the case – an essential element of its decision to issue the injunction. In upholding St. John's challenge, the Federal Circuit found its expert's affidavit to be critical.
"Mr. Press’s affidavit constitutes evidence that alternative designs … would adversely affect the utility of the medical label sheet," Circuit Judge Sharon Prost wrote for the three-judge panel. "It articulates a clear functional reason why the use and purpose of the article of manufacture dictated that the 'wristband' labels be located at the bottom of the sheet."
A design patent is invalid, the court noted, if the design is primarily functional rather than ornamental. The design is deemed to be functional when "the appearance of the claimed design is 'dictated by' the use or purpose of the article."
The mere presence of alternative designs does not decide the issue. Rather, the question is whether the alternatives would adversely affect the utility of the article "such that they are not truly 'alternatives' within the meaning of our case law."
Here, the district court relied exclusively on its finding of a multitude of alternative designs, while making no finding as to whether they would adversely affect the utility of the medical label sheet.
"The district court makes no reference to St. John's evidence that the overall arrangement of the labels on the medical label sheet was dictated by the use and purpose of the medical label sheet and that alternative designs lacking that arrangement would adversely affect the utility of the sheet," the court said.
The expert's affidavit, the court continued, "was sufficient to raise a substantial question of invalidity," and PHG offered no evidence refuting the affidavit.
"Because we find that St. John has raised a substantial question of the validity of the two patents at issue, the district court abused its discretion by granting PHG's motion for a preliminary injunction," the court concluded. "Therefore, we vacate the preliminary injunction."
The case is PHG Technologies LLC v. St. John Companies Inc., Case No. 06-1169 (Fed. Cir., Nov. 17, 2006).
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